Question

On January 1, 2015, White Water issues $200,000 of 7% bonds, due in 10 years, with interest payable annually on December 31 each year.

Required:
Assuming the market interest rate on the issue date is 6%, the bonds will issue at $214,720.
1. Complete the first three rows of an amortization table. Use Illustration 9-11, except the dates for the first three rows will be 1/1/12, 12/31/12, and 12/31/13 since interest is payable annually rather than semi-annually. Interest expense for period ended December 31, 2015, is calculated as the carrying value of $214,720 times the market rate of 6%.
2. Record the bond issue on January 1, 2015, and the first two interest payments on December 31, 2015, and December 31, 2013.



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  • CreatedJuly 15, 2014
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